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| FINA0028-1 | International Finance
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| Duration : | 24h Th |
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| Credits/ECTS : |
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| Holder(s) : | Aline Muller |
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| Language : | English language |
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| Course contents : | The course is structured along three related dimensions:
International Investments (2 weeks)
Focus: International portfolio allocation - international financial markets - investment game
This course introduces you to managing international asset portfolios via capital markets and lending institutions. It will give you the opportunity to test your investment skills in a simulated real-life international investment game. While you will be managing your portfolio, the course will offer you a comprehensive and up-to-date coverage of international investment concepts and theories. It will provide you with a detailed analysis of the benefits and dangers of investing abroad - highlighting as well the complications caused by the very process of international investment decision making.
Students will be asked to analyze issues like:
- The International Capital Asset Pricing Model
- Country versus Industry Diversification
- Inefficiencies in emerging markets: pitfalls or opportunities
- Contagion versus Integration: two sides of the same coin?
International Finance (2 weeks)
Focus: Exchange rate markets and Purchasing Power Parity
In this part of the course we will study the dynamics of exchange rate markets (spot and future markets) as well as international trade and capital flows. One of our goals will be to understand the underlying mechanisms of the Purchasing Power Parity theory as well as the origins, implications and role of existing deviations from the PPP equilibrium. The course incorporates the analysis of current financial and economic events around the globe: current issues facing the euro / the dollar, current state and challenges from the US perspective, the question related to competitive devaluations, and more.
Students will be asked to analyze issues like:
- The Forward Premium Puzzle
- Currency crises
- Multiple dilemmas facing international currency agreements
- Dollar versus Euro
Multinational Financial Management (two weeks)
Focus: Specific guidelines for making financial decisions in an international context
The purpose of this part of the course is to provide a clear conceptual framework for understanding multinationals' key financial decision-makings. Too often companies focus on the threats and risks inherent in venturing abroad minimizing the opportunities that are available to multinational firms, such as the ability to obtain a greater degree of international diversification and the ability to arbitrage between imperfect markets. The course incorporates - here as well - the analysis of current financial and economic events around the globe: current issues facing European firms' competitiveness, the debate over regulation, the political considerations underlying the debate over protectionism, and more.
This part of the course is enhanced through a detailed real-life analysis of the impact / threats / opportunities of Asian markets. The diagnostic will try to build and justify expectations related to country risk considerations, foreign direct investment, competitive disequilibria and growth. |
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| Course objective : | At the end of this course students will be able to: - Understand the concept of international diversification, knowing benefits and several caveats of international diversification
- Know the products to hedge currency risk and be able to hedge currency risk using currency futures.
- Understand how portfolio performance can be measured in an international portfolio.
- Understand the importance of the exchange rate in investing internationally.
- Understand the importance and multiple dimension of international corporate management.
- Practical knowledge of the theoretical concepts addressed during the course will be gained through the various course projects, through the paper discussions and through the hypothetical investment portfolio that students manage during the course. |
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| Prerequisites : | Finance and / or investment course. |
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| Workshops : | to be defined |
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| Organization : | Tentative Weekly Schedule
to be defined |
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| Written notes : | - Solnik, B. and D. McLeavey, 2004, International Investments, Pearson Addison Wesley, 5th International Edition. (required chapters: 1, 2, 3, 4, 6 (partly), 9, 10, 11, 12)
- Additional article readings (to be announced). |
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| Assessment : | to be defined |
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| Contacts : | Aline Muller, Ph.D.
Ethias Professorship
Assistant Professor of Finance, HEC - Business School of the University of Liège (Belgium)
Assistant Professor of Finance, Nijmegen School of Management, Radboud University (The Netherlands)
Please note that my address and phone number have changed :
Rue Louvrex 14, Bldg. N1,
B-4000 Liège Belgium
tel : 0032 4 232 7435
email : aline.muller@ulg.ac.be
website : www.finance.hec.ulg.ac.be |
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